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Creating a financial plan for the future is always a wise decision. Your estate planning portfolio will comprise several documents, including a living trust and will. You might wonder how a living trust vs a will in Arizona works and what that means for you. Let this guide help you understand the differences between an Arizona living trust and versus will.
What Is the Difference between a Will and a Living Trust in Arizona?
Generally, if you have a will, you would also have a living trust. These are factors you need to consider when comparing a living will vs a will in Arizona:
Purpose
A living trust vs a will in Arizona will serve different purposes in your estate planning portfolio. A revocable living trust in Arizona is a legal tool where you transfer your assets as the grantor.
A trustee is appointed to manage the trust for specific beneficiaries. As the grantor, you can also be the trustee and primary beneficiary during your lifetime. This will allow you to maintain control and ownership of the assets.
On the other hand, a will ensures your assets are distributed according to your wishes after you pass away. It becomes effective at death and you can name guardians for minors and an executor to carry out your instructions.
By naming an executor, you ensure that the terms of your will are carried out efficiently and effectively. Creating a will protects your loved ones and helps preserve your legacy.
Probate
Probate is a widely discussed topic in estate planning. One of the main benefits of a living trust vs a will in Arizona is that it avoids probate.
Probate is the court-supervised process for distributing your estate after your death. An. Individual doesn’t own assets in a trust—the trust owns them. As a result, they avoid the probate process entirely.
A living trust will allow you to have more control over your assets even while you are still alive. This document empowers you to have a say in who manages your assets when you pass by, avoiding probate.
Assets that are passed through a will usually need to go through probate. Keep in mind that this process can be time-consuming and sometimes expensive.
When distributing assets through a will, going through the probate process is unavoidable. Ensuring the proper transfer of assets according to the deceased's wishes might take some time and money.
Privacy
Living trusts offer more privacy than wills. Wills become public record after probate, but revocable living trusts in Arizona remain private. Only the beneficiaries and trustees have the legal right to access the trust document. Thus, ensuring sensitive information stays private and protected.
After a will is probated, it becomes a public record. This means that your neighbors, friends, and anyone can access the details of your estate and who receives your assets. Suppose you want your affairs to remain private. In that case, this is something to consider when comparing a living trust vs a will in Arizona.
Date of Effectiveness
A will only take effect when you pass away. Unlike a will, a living trust becomes effective upon creation when you transfer assets. This means you can trust that someone will safeguard and manage your assets as you wish, even while you're alive.
Asset Management
Set up a living trust in Arizona to manage your assets if you become incapacitated. By including provisions for asset management, you can avoid the hassle of having a court-appointed conservator.
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The focus of a will is primarily on post-death matters, such as distribution of assets and handling of affairs. It does not address asset management in case of incapacity. Incapacity and management are factors to consider when comparing a living trust vs a will in Arizona.
Amendment and Revocation
Living trusts can be amended or revoked by you during your lifetime. A person can revise or revoke a will if they are alive and mentally capable. Being able to make changes keeps these legal documents aligned with your wishes and offers peace of mind.
How Much Does a Living Trust in Arizona Cost?
The living trust Arizona cost varies depending on the complexity of your estate and whether you use a lawyer. While DIY trusts exist, professional help avoids costly mistakes and structures your trust properly under Arizona living trust rules:
- You must be at least 18 years old and mentally competent to create a trust
- The trust must name a trustee and at least one beneficiary
- The trust document must clearly state the grantor’s intent
- The trust becomes valid once it is signed and funded with assets
- A revocable living trust in Arizona can be changed or revoked by the grantor at any time
- The trust avoids probate if properly funded
- Arizona does not require the trust to be notarized, but it’s recommended
- The trust must comply with Arizona statutes to be enforceable
- If challenged, the trust can be contested in court under certain conditions
- The trust remains private and is not part of the public record unless involved in a legal dispute
How Much Does a Will in Arizona Cost?
The cost of creating a will in Arizona can vary depending on how you do it. Technically, you can create your own handwritten will for free. You could also use a DIY service or pay for a cheap online service to get it done. Prices vary for that.
However, working with a professional is best is you have lots of assets. Professional help can prevent costly mistakes later, especially if you have children, property, or specific wishes.
Do I Need a Will and a Living Trust in Arizona?
Having a living and a will in Arizona is generally good practice. Since they have different purposes, they cover different parts of your estate plan. Having both will help ensure you have a comprehensive plan.
Do I Need an Attorney to Set up Trust in Arizona?
You should work with attorneys and financial planners with a background in estate planning to set up a trust in Arizona. What you fund a living trust with is important. Funding mistakes for your living trust in Arizona can actually cost you. Placing all your assets in a living trust might seem smart, but it could cause you to lose some benefits.
For example, suppose you have an IRA, and you designate your living trust as the beneficiary. In that case, your spouse will lose the benefit of spousal continuance. Spousal continuance allows your spouse to treat the IRA as their own.
Someone without experience in estate planning might assign assets in a living trust that you shouldn’t be there. Also, experts would be able to navigate other factors such as:
Probate Threshold
In Arizona, the probate process has a threshold. Assets valued at $75,000 or less won’t undergo a formal probate. To utilize this simplified process:
- At least 30 days must have passed since the decedent's death.
- There should be no pending application or appointment of a personal representative.
- The total value of personal property must not exceed $75,000, and real estate must not exceed $100,000.
This simplifies the court process because it is rapid and reduces the burden on the courts. Even with a small estate, you should still consider a living trust. A rapid, informal probate is still public record, so your affairs will be public.
No-Contest Clauses
A no-contest clause, also called an “in terrorem” clause, in a will or trust provides protection and discourages disputes. If a beneficiary decides to challenge or contest the document, including specific provisions, forfeit any inheritance.
This will deter frivolous challenges to your estate plan and preserve your intent. A clause like this can make it easier for your family to accept the terms and maintain harmony among them.
Work with Us to Protect Your Assets in Arizona
Regarding estate planning, it's vital to cover all your bases. There are distinct differences in Arizona for living trusts vs wills. Many opt for both for a comprehensive estate plan. Working with the experts at Asset Preservation Wealth and Tax will help you develop a financial plan for your unique needs.
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Stewart Willis is the founder and president of Asset Preservation Wealth & Tax, a financial planning firm in Phoenix, Arizona. Investment advisory services offered through Foundations Investment Advisors, LLC, an SEC registered investment adviser.
The commentary on this blog reflects the personal opinions, viewpoints and analyses of the author, Stewart Willis, providing such comments, and should not be regarded as a description of advisory services provided by Foundations Investment Advisors, LLC (“Foundations”), an SEC registered investment adviser or performance returns of any Foundations client. The views reflected in the commentary are subject to change at any time without notice. Nothing on this website constitutes investment, legal or tax advice, performance data or any recommendation that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person. Personal investment advice can only be rendered after the engagement of Foundations for services, execution of required documentation, including receipt of required disclosures. Any mention of a particular security and related performance data is not a recommendation to buy or sell that security. Foundations manages its clients’ accounts using a variety of investment techniques and strategies, which are not necessarily discussed in the commentary. Any statistical data or information obtained from or prepared by third party sources that Foundations deems reliable but in no way does Foundations guarantee the accuracy or completeness. Investments in securities involve the risk of loss. Any past performance is no guarantee of future results. Advisory services are only offered to clients or prospective clients where Foundations and its advisors are properly licensed or exempted. For more information, please go to https://adviserinfo.sec.gov and search by our firm name or by our CRD # 175083.
